Mamaearth is aiming for a $3 billion valuation in its IPO in 2023

The Indian skincare business, which is backed by Sequoia Capital, was last valued at $1.2 billion in January 2022, when it raised new financing from Sequoia and Belgium’s Sofina.

According to a Reuters story, Mamaearth, a direct to consumer (D2C) skincare and beauty business, is in talks to raise $300 million in an IPO in the next 12-15 months, with a valuation of roughly $3 billion.

The Indian skincare business, which is backed by Sequoia Capital, was last valued at $1.2 billion in January 2022, when it raised new capital from Sequoia and Sofina of Belgium.

According to the article, Mamaearth is aiming for a valuation of roughly $3 billion, or 10-12 times forecast earnings, based on sales growth and future revenue possibilities. By the end of 2022, it intends to file draught regulatory filings.

The skincare business is in early talks to raise nearly $300 million through its initial share sale, with a figure of $350 million being suggested.

JP Morgan Chase, India’s JM Financial, and Kotak Mahindra Capital are said to be in talks to be appointed as bookrunners for the sale.

Mamaearth, which was founded in 2016, has become well-known in India for its “toxin-free” goods such as face cleansers, shampoos, and hair oils. In the expanding personal care industry, it competes with Hindustan Unilever, a branch of Unilever, and Procter & Gamble Co.

Mamaearth’s IPO aspirations coincide with a broader sell-off in capital markets and a slowdown in India’s burgeoning startup sector, which raised a record $35 billion in funding last year. Some firms are now reducing their workforce and finding it difficult to attract money.

Varun Alagh, a former Hindustan Unilever executive, and his wife Ghazal co-founded Mamaearth. With renowned Bollywood celebrities endorsing the brand, the duo has capitalised on India’s expanding e-commerce usage by selling its products on Amazon and Walmart’s Flipkart.

According to Avendus, an Indian financial services organisation, the beauty and personal care market in India is predicted to rise to $27.5 billion by 2025, up from $17.8 billion in 2020. During that time, the number of online beauty buyers is expected to increase to 135 million from 25 million, according to the report.

However, one equities research analyst believes Mamaearth’s IPO success would be determined by how quickly company expands into offline sales. The majority of Indians still purchase in physical stores, with e-commerce accounting for only 5-6 percent of total spending.

Mamaearth’s revenues come from online platforms 70% of the time, according to CEO Alagh, but the company is looking for a stronger offline presence this year, with 40,000 retail stores in 100 cities.

According to one of the three reports, Mamaearth’s company, Honasa Consumer Pvt Ltd, had a revenue of $130 million in the fiscal year that ended in March 2022, with a little profit.

Despite the Covid-19 pandemic, MamaEarth grew at a blistering speed and turned profitable in the fiscal year that ended in March 2021. The company made a profit of $246 million after taxes.

Mamaearth has operations in Nepal, Bangladesh, and Sri Lanka, in addition to India, and is about to debut in the Middle East.